CFO, The Magazine for Senior Financial Executives articles from March 2003

CFO, The Magazine for Senior Financial Executives archives from March 2003

Nor a lender be. (From the Editor).(Customer financing is discussed)(Brief Article)(Editorial)
March 1, 2003... IN THE BEST OF TIMES, CUSTOMER FINANCING CAN be a tempting means of generating sales. In the worst, the practice can produce little but pain. That's not only because of the leverage customer financing usually requires, since debt is so...

Letters to the editor.(Letter to the Editor)
March 1, 2003... Sounding Off On Incentive Camp ON BEHALF OF MANY EMPLOYEES who have been cheated by this type of unscrupulous or incompetent management, I thank you for highlighting the issues ("Incentive Confrontation," January). I, too, was promised...

Tempting. (Newswatch).(Temporary staffing industry may benefit from the Sarbanes-Oxley Act of 2002)(Brief Article)
March 1, 2003... Add the temporary-staffing industry to the roster of businesses benefiting from the Sarbanes-Oxley Act of 2002. With companies barred from using their auditors to bring internal controls up to speed and reluctant to add to head count,...

Mum's the word. (Earnings Guidance).
March 1, 2003... IN LATE JANUARY, McDonald's Corp. announced it lost $344 million in the fourth quarter--its first quarterly loss ever and more than four times greater than it had forecast just five weeks earlier. The world's largest restaurant owner then said...

The untouchables. (Whistle-Blowers).
March 1, 2003... WHISTLE-BLOWERS who report suspected violations of securities laws now have broad protections under the Sarbanes-Oxley Act of 2002--so broad, says employment attorney Michael Nosier of Denver-based Rothgerber Johnson & Lyons LLP, that companies...

The holes in Black-Scholes. (Stock Options).(Illustration)
March 1, 2003... Does the Black-Scholes option-pricing model--the most common method for valuing stock-option grants--accurately forecast how much an option will be worth? Not even close, says a study by Sibson Consulting. "Black-Scholes is not a good predictor...

Avoiding overtime losses. (Compensation).
March 1, 2003... THINK ALL OF YOUR SALARIED workers are exempt from overtime pay? Think again. Aided by the Fair Labor Standards Act's tricky and outmoded language, salaried managers and even executives are joining class-action lawsuits that insist their...

Cost of perks piling up. (Employee Benefits).(Illustration)
March 1, 2003... With salaries stagnating and healthcare expenses booming, benefits are becoming an increasing portion of the total cost of employment. The U.S. Chamber of Commerce reported in January that employee benefits made up 39 percent of total payroll...

Surf's up; taxes are down. (State Tax).
March 1, 2003... SPECTACULAR BEACHES and topnotch surfing opportunities weren't the reasons Landmark Networks Inc., a Silicon Valley, Calif.-based wireless startup with no profits or customers, decided to move to Hawaii late last year. Instead it was the...

Return to sender? (Class-Action Settlements).
March 1, 2003... Corporate targets of class-action lawsuits, such as securities-litigation or product-liability cases, have long argued that plaintiffs' lawyers stand to gain exponentially more than the members of the class. Indeed, plenty of the money won in...

Boo--hoo economics. (Global Confidence Survey).(Illustration)
March 1, 2003... UNCERTAINTY about a potential war in the Middle East is causing much consternation among finance chiefs. In fact, CFOs are gloomier about the short-term economic prospects for the United States than they've been since December 2001, when the...

A sense of insecurity: hacking incidents and other computer-systems breaches are on the rise. But will they reach C-level? (Techwatch).(Industry Overview)
March 1, 2003... EVEN BEFORE THE SO-CALLED SQL SLAMMER worm choked Internet traffic in mid-January; two organizations that gather reports of vulnerabilities (exploitable cracks in IT infrastructures) and intrusions (viruses, worms, hacker attacks) had released...

Close to divest: many companies are poised to shed failed acquisitions, but few want to talk about it. (New Deals).(Illustration)
March 1, 2003... A MID THE UNCERTAINTY about just when deal-making will resume in earnest, one thing is sure: the backlog of operations to be divested by companies is burgeoning. "If I were to open a business right now, I'd open a practice in divestitures, not...

Filling the void: in the wake of Sarbanes-Oxley, insurers are making a ase for covering CFOs with key-person policies. But who's buying it? (Spotlight Insurance).
March 1, 2003... ANDREW MORRISON, CFO OF American Science and Engineering Inc., passed away in August at the age of 52, a year after joining the $70 million I manufacturer of X-ray detection and imaging systems. At d the time of Morrison's hiring, AS&E chief...

What goes around: customer financing seemed like a smart move when times were good. Now, it's wreaking havoc on corporate balance sheets. (Cover Story).(Illustration)(Cover Story)
March 1, 2003... It's no secret that customer financing has backfired badly on telecommunications-equipment suppliers. By the end of 2000, according to McKinsey & Co., nine suppliers--Alcatel, Cisco, Ericsson, Lucent, Motorola, Nokia, Nortel, Qualcomm, and...

The prime of Ms. Nell Minow. (A CFO Interview).(Minow is editor of The Corporate Library)(Interview)
March 1, 2003... FOR THE SHAREHOLDER ACTIVIST, THESE HAVE BEEN BOTH THE BEST AND THE WORST OF TIMES. (A CFO Interview) For most of the past 16 years, shareholder activist Nell Minow has felt like a cross between Chicken Little and the Little Red Hen. Her...

Anxiety's price: new regulations call into question the value of off-balance-sheet financing, if only because of their impact on bankers' fees. (Special Report Banking).
March 1, 2003... The Financial Accounting Standards Board's new rules for off-balance-sheet financing may not prevent another Enron, but they could very well increase the cost of capital for more honest companies. For one thing, companies that have to...

Three outstanding new events from CFO executive programs.
March 1, 2003... EXECUTIVE PROGRAMS CFO'S FORUM FOR FEDERAL GOVERNMENT FINANCE EXECUTIVES How To Drive Organizational Performance Through Finance Process Excellence * May 20, 2003 * National Press Club * Washington, DC Learn how...

Separate but liable: companies have walled off valuable assets in subsidiaries for decades. Are those walls starting to crack? (Law).
March 1, 2003... THE ABILITY TO LEGALLY SEPARATE RISKS and liabilities within a corporation is a cornerstone of Corporate America. Subsidiaries, limited-liability corporations (LLCs), franchisor/franchisee arrangements, joint ventures, securitizations, trusts,...

Two weeks in January: the SEC put much of the Sarbanes-Oxley Act into effect by passing a slew of new rules. Here's what was proposed and what was disposed. (Regulation).(Illustration)
March 1, 2003... RESIGNING HIS POST AS SECURITIES AND EXCHANGE Commission chairman on November 5 did nothing to keep Harvey Pitt from being the center of controversy. First, of course, he didn't leave. Then, two months later, the lame-duck chairman presided...

Staying put: your move. (Longtime CFOs).(Illustration)
March 1, 2003... AT A TIME WHEN A FEW down quarters can lead to a forced resignation, Paul Coghlan, 57, is an anomaly. He's been sitting at the same Formica-topped desk as CFO of Milpitas, California-based Linear Technology Corp. for 17 years, as revenues have...

CFOs on the move. (Grapevine).(Brief Article)
March 1, 2003... J. Phillip Cooper takes over as CFO of consulting firm Charles River Associates Inc. The firm also names Karen T. Frost as VP of finance. Cooper was acting finance head before the appointment, and Frost was division CFO of Putnam...

Coming clean (Sorta). (Grapevine).(Owl Securities and Investments former CFO Richard K. Halford pleads guilty)
March 1, 2003... WHAT SORTS OF punishments await wayward CFOs in this new era of corporate reform? For Richard K. Halford, former CFO of Kansas City, Mo.-based Owl Securities and Investments, it was not hard time, but public soul-baring. Halford pleaded...

Looking good isn't enough. (Grapevine).(Celebrity directors may have disadvantages)(Brief Article)
March 1, 2003... We're sure that Priscilla Presley, Alexander M. Haig Jr., and Francis Ford Coppola are valued members of the board of MGM Inc., upon which they all sit, but we wonder what all the new director-independence and financial-literacy requirements...

Regulation time. (Editor's Note).(topics in this issue of CFO)(Brief Article)(Column)
March 22, 2003... "A SHAREHOLDER IS A SHAREHOLDER," says Ralph Hromisin, CEO of privately held Benco Dental Co. He was explaining why he keeps a close eye on the requirements put forth by the Sarbanes-Oxley Act, and has actually made changes within his company...

Putting T&E on autopilot. (Browser).(travel and entertainment expense reports)(Brief Article)
March 22, 2003... Is there an "expense irony" that could save your company money? Aberdeen Group Inc. analyst Christa Degnan says that while many companies have systems in place to price and track the smallest component within their supply chains, they often...

Who's buying how? (Management).(information technology purchases)
March 22, 2003... How do companies decide which IT suppliers to do business with? That depends on who's doing the deciding--and on who's assessing corporate practices. According to Jupiter Research, non-IT executives tend to favor companies whose products meet...

How'm I doing? (Browser).(best practices and business intelligence software)(Brief Article)
March 22, 2003... Companies expend a lot of effort (and money) in assessing where they are and where they're going, but even the best don't think they do it very well. The Hackett Group, which benchmarks best practices at more than 2,000 companies, found that...

Who/what/Wi-Fi. (Browser).(wireless fidelity for pay phone networks)(Brief Article)
March 22, 2003... The exhortations of Carrot Top notwithstanding, pay phones would seem to be inching closer to extinction one cell phone at a time. But a company called inCode Telecom sees a new role for them, as Wi-Fi (wireless fidelity) "hot spots." In a...

Desk be not proud. (Tomorrow's Workforce).(remote workers)(Brief Article)
March 22, 2003... It's telling that corporate employees, lauded as "stakeholders," "clients," "team members," or what have you in certain contexts, are simply--one might say disparagingly--labeled "users" by IT folks. But, to paraphrase George Bailey, these...

Let there be LEDs. (Browser).(light-emitting diodes)(Brief Article)
March 22, 2003... CFOs who think they've maximized every technology investment their companies make should think again. While not, strictly speaking, a form of information technology, lighting does have an increasing technological aspect to it, particularly if...

The truth is in there. (Emerging Technology).(molecular, near-infrared markers to prevent fraud)(Brief Article)
March 22, 2003... In the film 'Catch Me If You Can', an inventive con man lived large on forged checks, thanks to ingenuity and an eye for detail. Today he'd need a degree in molecular physics. Bar codes and radio-frequency ID (RFID) tags allow a company to mark...

Fine time on the desktop: software audits can be costly, but you can avoid penalties and make the most of what you've got. (Bookmark).(includes related article)
March 22, 2003... QUAN HA WAS DRIVING THROUGH LOS ANGELES when he heard a disturbing announcement on the radio. The Business Software Alliance, an industry group that combats software piracy and similar abuses, was urging companies to audit the software they use...

Quantum loop: with "performance" as its middle name can new software help companies link past, present, and future?(includes related article)(Cover Story)
March 22, 2003... BUSINESS IS BOOMING AT ERICKSON RETIREMENT Communities Inc. Or, to be more precise, baby-booming. With an aging population about ready to bid farewell to the three-bedroom colonials of their middle years and take up residence elsewhere, the...

Under pressure: Sarbanes-Oxley is just one of many new regulatory requirements companies face. Can IT help?
March 22, 2003... LAST YEAR, IN A SPEECH BEFORE THE AMERICAN SOCIETY OF CORPORATE Secretaries, the Securities and Exchange Commission's Cynthia Glassman took the corporate-governance group for a not-terribly-invigorating walk down Memory Lane. "The public...

Get smart: to build better IT projects, start by building a better project manager.
March 22, 2003... "MONTHS LATE." "WAY OVER BUDGET." "TOTALLY IRRELEVANT." If those phrases strike you as synonymous with "IT projects," join the club. The good news is that companies are finally getting some religion around this major, and majorly...

The power of 3: one way to bridge the CFO-CIO divide; bring a third party into the conversation.
March 22, 2003... Having looked at life from both sides now, Bill Glassen is acutely aware of the often profound disconnect between finance and IT. In fact, he embodies it. The former controller at Borden Milk Co. says his lack of knowledge about technology once...

Centers of attention: smaller, more-powerful servers are just one addition to the ever-evolving data center. (IT Strategy).
March 22, 2003... Last month, Sun Microsystems Inc. announced a raft of new technologies intended not only to give the company a boost in sales but also to I refocus attention on an area of IT that hasn't been buzz-worthy in years and possibly decades: the...

Once more, without reeling: CRM has stumbled, but the next round may produce better results. (Software).
March 22, 2003... The three letters "CRM" stand for customer relationship management, but given all the recent bad press CRM has been receiving, one might imagine they stand for "costly, rotten mistake." How did we get here? CRM software, sold by a long list of...

A hire power: services E-procurement is quietly gaining ground, helping companies control an expense that often escapes scrutiny. (Finance IT).
March 22, 2003... Back in the Dark Ages--before last summer--KeyBank USA hired temporary workers the old-fashioned way, which is to say inefficiently and expensively. If IT managers, for example, needed programmers or Web developers for a three-month project,...

A shore thing? Risk and reward have always been major factors in offshore outsourcing. The trick, of course, is to mitigate the former while maximizing the latter. (Outsourcing).
March 22, 2003... Not long ago, after FBI agents raided a Massachusetts software company they suspected of having ties to terrorists, calls began pouring into Tata Consultancy Services, an offshore outsourcing firm. Clients, most of them large American companies...

Big ideas and the beauty of the box: fresh thinking is good, but fad-surfing is bad. Enter the CFO? (Take-Away).
March 22, 2003... In this post-Enron, back-to-basics world, the thought of a CEO brimming with new ideas seems in itself a very bad idea. This is certainly not the time to get creative with tax shelters, off-balance-sheet financing, or revenue recognition. But...